Reference no: EM131041935

The Early Evolution of Manufacturing Firms: Ford Motor Company Goes International (USA) Ford Motor Company has been in business for over 100 years and when it comes to a global mindset, Ford is ahead of most of its competitors, although this was not always the case. Early in its history, Ford was like many large firms, which often sent people off to other major countries to set up companies just like the one back home. The first Henry Ford, the founder of the Ford Motor Company, was in many ways an internationalist, because within a few years of establishing his company in the US he was opening manufacturing and assembly plants all over the world— the first of which was a Model T assembly plant in Trafford Park, England, in 1911— that were essentially smaller versions of the original plant in Detroit. Over the years Ford evolved into a collection of local country and regional fiefdoms. But by the mid-1920s (even earlier in some countries), a sense of local pride had developed in the Ford plants in many countries around the world. These countries all began to develop their own automotive companies. Suddenly there were local automotive companies in the UK, in France, Germany, Australia, all making their own vehicles. Nations wanted to assert their independence and saw the automotive industry as a means of investing in their own economies. Indeed, some early automotive pioneers in other countries even began to export their own cars to other countries as well as develop their own plants elsewhere. The Europeans exported, the Americans exported, the Japanese exported— that was the way the competitive game was being played. This was the beginnings of the “multi-domestic” structure for large multinational corporations, as described in this chapter. In the 1960s, though, regionalism began to develop with the emergence of the European Common Market, NAFTA, ASEAN, and other regional trading groups. Countries kept their own political systems and social values but formed economic trading blocs. So … big companies established regional headquarters within the various major trading blocs. Ford Europe, Ford Asia-Pacific, and Ford South America were established in this period. This was when most of the regional and functional fiefdoms (with each region becoming very independent) became firmly entrenched at Ford. (This is what is referred to in the text as the “regional” corporate structure, an extension of the “multi-domestic” structure.) The fiefdoms were excellent at what they did: they squeezed every last ounce of efficiency out of the regional model. For example, back in the period of nationalism, Ford had multiple accounting activities around the world— there were 15 in Europe alone. The regional model got it down to four: one in Europe, one in the US, one in Asia-Pacific, and one in South America. But even with that efficiency, Ford felt that the model didn’t work anymore. Today Ford is moving to a fourth stage of economic evolution with the globalization of all aspects of its international operations: accounting, capital, communications, economic policy, trade policy, human resources, marketing, advertising, brands, etc. The auto industry around the world has become globalized. Germany and Japan produce cars in the US, Korea produces cars in Eastern Europe, the US produces cars in Mexico and China, and India, Malaysia, China, and Mexico export cars and parts throughout the world. And there is ongoing consolidation of auto companies throughout the world as firms such as Renault (France) acquired Nissan (Japan), Ford (US) acquired Volvo (Sweden), Tata (India) acquired Jaguar (UK/ US), and Ford has just announced that Geely (China) is acquiring Volvo (Sweden). Ford now manufactures and distributes automobiles in at least 120 markets (some articles suggest 200 markets!) on six continents, with 176,000 employees (a major downsizing from over 350,000 in the last decade) in more than 80 plants worldwide (a downsizing from about 110 plants less than a decade ago). In addition, the automotive industry has become an electronics-driven industry. It is increasingly a business that requires huge investments in technology and intellectual capital, not only for constant innovations in development and manufacturing, but in automobiles themselves. And now it is technology and human capital that have globalized. 1) Summarize the evolution of Ford's global presence in the marketplace. 2) Discuss the MNE business strategy used by Ford. The responses to each of the questions should be at least 150 words in length.